BILL NUMBER: SB 594 AMENDED
BILL TEXT
AMENDED IN SENATE APRIL 18, 2013
INTRODUCED BY Senator Steinberg
FEBRUARY 22, 2013
An act to add Part 38 (commencing with Section 64200) to Division
4 of Title 2 of the Education Code, and to add Sections 17057.6 and
23610.6 to the Revenue and Taxation Code, relating to education.
LEGISLATIVE COUNSEL'S DIGEST
SB 594, as amended, Steinberg. California Career Pathways
Investment.
The Personal Income Tax Law and The Corporation Tax Law authorize
various credits against the taxes imposed by those laws.
This bill, in accordance with legislative findings contained in
this bill and for calendar years beginning on or after January 1,
2014, would, for a business entity, as described, that provides
career technical education, authorize a credit against those taxes,
subject to specified limitations, in an amount equal to that
allocated by the California Career Pathways State
Investment Committee, a committee established by this bill. This bill
would require each school district and community district to create
a Career Pathways Investment Trust Fund, the funds in which would be
used for the purposes of financing program and administrative costs
relating to the operation of career pathways programs, as provided.
This bill would impose specified duties on school districts with
regard to career pathways programs.
Existing law authorizes the governing board of a community college
district to establish contract education programs within or outside
the state by agreement with any public or private agency,
corporation, association, or any other person or body, to provide
specific educational programs or training to meet the specific needs
of these bodies. Existing law authorizes the governing board of any
school district to initiate and carry on any program or activity, or
may otherwise act in any manner that is not in conflict with or
inconsistent with, or preempted by, any law and that is not in
conflict with the purposes for which school districts are
established.
This bill would , among other things,
authorize a school district or a community college district
the California Career Pathways State
Investment Committee and a business entity to enter into
social impact bonds Workforce Development
Bonds , as defined, in accordance with applicable laws, to fund
career pathways programs , as defined
operated by the business entity and a school district, community
college district, or a consortium of school districts and
community college districts. The bill would authorize a local
educational agency or community college district to issue lease
revenue bonds, as specified, or enter into loan or lease agreements,
to finance the operation of career pathways programs .
The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that no reimbursement shall be made
pursuant to these statutory provisions for costs mandated by the
state pursuant to this act, but would recognize that local agencies
and school districts may pursue any available remedies to seek
reimbursement for these costs.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. It is the intent of the Legislature to
appropriate two hundred fifty million dollars ($250,000,000) from the
General Fund in the 2013-14 fiscal year to the Career Pathways State
Revolving Fund. The source of funds for that appropriation may
include state apportionments for purposes of Section 8 of Article XVI
of the California Constitution and offsetting budget savings derived
from reforms to the Enterprise Zone Act (Chapter 12.8 (commencing
with Section 7070) of Division 7 of Title 1 of the Government Code)
and the New Jobs Tax Credit.
SECTION 1. SEC. 2. Part 38
(commencing with Section 64200) is added to Division 4 of Title 2 of
the Education Code, to read:
PART 38. Career Pathways Investment Credit and Trust Fund
64200. (a) The Legislature finds and declares the following:
(1) After five years of deep recession and high rates of
unemployment, the California economy has begun to recover.
(2) One of the most important actions California can take to
hasten that recovery is to invest in the development of a skilled
workforce to perform well-paying jobs in growing and emerging sectors
of its regional economies.
(3) The fastest growing fastest-growing
occupations are expected to be those that require scientific,
technical, engineering, or mathematics (STEM) skills, such as jobs in
biotechnology, digital media arts, agricultural technology,
green technology, or computer-related and health-related
fields.
(4) California's systems of public education, which includes
primary and secondary schools, technical training, apprenticeship,
two-year and four-year colleges, and graduate schools, play a
critical role in workforce preparation, one that could be
significantly strengthened by a tighter focus on education and
training that delivers the skills and capacities most called for in
high-opportunity sectors.
(5) This kind of workforce preparation is best accomplished in
concert with regional business and industry, so that students receive
the most current and relevant education that prepares them to
compete for good jobs in their communities after graduation from high
school or postsecondary education and training.
(6) Work-based educational and training opportunities enhance the
employment prospects of low- and moderate-income individuals and
contribute to the stability and economic development of their
communities.
(b) It is the intent of the Legislature that federal bank
regulators, specifically, the Federal Reserve bank, the Office of the
Comptroller of the Currency, the Federal Deposit Insurance
Corporation, and the Office of Thrift Supervision, give credit to
federally insured banks and thrifts on their compliance exams under
the federal Community Reinvestment Act of 1977
(Public Law 95-128) for grants, investments, and loans to
educational institutions, nonprofit organizations, and businesses in
support of career pathways programs.
(c) It is the intent of the Legislature to establish state
fiscal incentives, such as Workforce Development Bonds,
grants, loans, and tax credits, that encourage California
businesses and industry to enter into partnerships with schools and
community colleges that strengthen the nature and quality of
education provided by those institutions. These partnerships will
connect high school pupils and teachers, and college students and
faculty, to real-world experience that provides sustained exposure to
applied academics, skill development, work-related experience, and
potential future employment. This experience will keep students on
track to graduation, further education, and productive careers.
(d) The dissolution of redevelopment agencies will increase
property tax revenues to K-14 school districts and
community college districts, including the one-time distribution of
redevelopment agency cash assets expected to occur in the 2012-13 and
2013-14 fiscal years. It is the intent of the Legislature that
school districts and community college districts
capitalize the Career Pathways Trust Funds established pursuant to
this act for the purposes of funding grants and
loans to businesses and offsetting administrative costs of the
program.
64201. For the purposes of this part:
(a) "Applicant" means a business entity that enters into a
contract or memorandum of understanding with a local educational
agency, community college, or workforce investment board to provide
career technical education that connects pupils to real-world
experience and provides sustained exposure to applied academics,
skill development, work-related education, and potential future
employment, and that applies to the committee for state
financial assistance, including Workforce Development Bonds and
the career pathways investment credit.
(b) "Authentic application" means an activity in the context of a
middle, high school, or community college course that requires pupils
to work actively with academic and technical concepts, facts, and
skills in a realistic, work-like setting that emulates the problems
encountered by professionals and the practices they use to address
them. These applications typically require pupils to examine a task
from a variety of perspectives, to draw upon multiple resources, to
collaborate with others, and to accomplish tasks and projects by
working in teams rather than individually.
(c) "Budget" means an estimate of all qualified expenditures to be
paid or incurred in providing the career pathways program over the
period for which the applicant is applying for the career pathways
investment credit.
(d) "Career pathways programs" means programs that support the
following:
(1) High school pathways programs delivered through high
schools, regional occupation centers or programs, California
Partnership Academies and other career academies, alternative
education programs, including continuation schools and programs
administered by county offices of education, or adult education
programs, that integrate Integrated academic and
technical learning to prepare that prepares
pupils for both postsecondary education and careers in
high-growth or high-need sectors of the economy. These programs
include core academic courses emphasizing authentic applications,
sequences or clusters of three or more courses that align with the
State Board of Education approved Office of
the Chancellor of the California Community Colleges-approved
or state board-approved career technical education
standards and frameworks that also integrate key academic concepts
and skills, work-based learning opportunities, and
additional services like counseling or supplementary instruction in
reading, writing, and mathematics. These programs may be
delivered through high schools, regional occupational centers or
programs, California Partnership Academies or other career academies,
alternative education programs, including continuation schools and
programs administered by county offices of education, adult education
programs, or community colleges.
(2) Curriculum and professional development.
(3) Middle school and early high school career
exploration activities.
(4) Externship and fellowship opportunities that expose
middle school and high school teachers and community college
faculty to the skills and competencies that pupils need for
successful employment in high-growth sectors of the California
economy.
(5) Active engagement by business and industry in pathway design
and implementation, work-based learning, assessment of student work,
and other aspects of effective preparation for success in further
postsecondary education and careers.
(6) Workplace learning and educational opportunities that prepare
pupils for careers in high-skilled, high-growth, and emerging
employment sectors, including, but not limited to, biotechnology
research and development, engineering and construction, advanced
manufacturing, health sciences and nursing, environmental sciences,
and agricultural technology.
(7) Programs that provide employment services and support to
individuals with exceptional needs, including autistic individuals.
(e) "Career Pathways Investment Trust Fund" means a fund
established in each local educational agency or community college
district for the purpose of financing program and administrative
costs relating to the operation of career pathways programs.
(f) "Career Pathways State Revolving Fund" means a fund
established in the State Treasury for the purpose of providing state
financial assistance to local educational agencies, community college
districts, and business entities that have entered into agreements
to implement and operate career pathways programs. State financial
assistance may include grants, loans, and the repayment of Workforce
Development Bonds.
(e)
(g) "Committee" means the California Career Pathways
State Investment Committee.
(f)
(h) "Qualified expenditures" includes the following:
(1) Paid jobs or internships for high school pupils or community
college students that are related to course work in a career pathway
program.
(2) Support and supervision for unpaid internships or other
work-based learning opportunities that give pupils the opportunity to
connect what they are learning in high school or community college
to its application in the real world.
(3) Teacher or faculty externships.
(4) Contributions to programs administered by postsecondary
institutions that provide support to middle school, high school, or
community college career pathways programs. This support may include,
but shall not be limited to, teacher training, curriculum
development, and other forms of technical assistance.
(5) Equipment and instructional materials, including equipment and
software to support technology-based instruction that provides
all of one or more of the following:
(A) Accelerated learning opportunities.
(B) Identification of skill and knowledge gaps.
(C) Targeted remediation to prepare pupils for college and
careers.
(6) Employees to provide instruction, in partnership with
credentialed teachers employed by the school district or faculty
employed by the community college, at the school site or
schoolsite or community college campus.
(7) Contributions to support staff who link career pathway
programs with regional business entities and assist in the
development of the memoranda of understanding provided in subdivision
(f) (h) of Section 64203
64204 . The staff may be employed by local
education agencies, community colleges, or regional intermediary
organizations.
(g)
(i) "Social impact bond"
"Workforce Development Bond" means a contract between
a school district or a community college district and private
investors who provide capital in exchange for a share of governmental
payments that become available if performance targets
the California Career Pathways State Investment Committee and an
applicant who agrees to provide capital to fund a career pathways
program jointly operated by the applicant and a school district or
community college district, or a consortium of school districts and
community college districts. The contract shall specify that the
California Career Pathways State Investment Committee shall repay the
bond if performance targets established for the career pathways
program are met. Financial returns to investors
the applicant may vary pursuant to the measured
level of performance. The bond issuer may use operating
funds from the sale of the bonds to contract with service providers
to deliver the services necessary to meet the performance targets.
Proceeds from the sale of the bonds shall be disbursed
by the committee to the Career Pathways Investment Trust Fund for
the local educational agency or community college district, and may
be used for career pathways program operations, development of
rigorous and career-relevant curriculum by the applicant and the
school district, community college district, or consortium of school
districts and community college districts, paid internships,
post-high-school financial aid for college, licensing and
credentialing programs, and wage subsidies for full-time employment
for pupils wh o successfully complete a career pathways
program.
64202. A school district or community college district may enter
into social impact bonds, in accordance with applicable laws, to fund
career pathways programs.
64202. (a) A local educational agency or community college
district may issue lease revenue bonds secured by the lease of any
property of the local educational agency or community college
district pursuant to subdivision (b), or enter into loan or lease
agreements not subject to Section 18 of Article XVI of the California
Constitution with the committee or private entities, to finance the
operation of career pathways programs.
(b) For purposes of the lease revenue bonds authorized in
subdivision (a), and notwithstanding any other law, a local
educational agency or community college district may lease any
property of the local educational agency or community college
district. The local educational agency or community college district
may enter into any other agreements or execute any other documents
necessary or desirable to carry out the purposes of this subdivision.
(c) A local educational agency or community college district may
enter into contracts or agreements with banks, insurers, or other
financial institutions or parties that it determines are necessary or
desirable to improve the security and marketability of, or to manage
interest rates or other risks associated with, the lease revenue
bonds issued pursuant to this section.
64203. (a) A Career Pathways Investment Trust Fund is hereby
established in each local educational agency or community college
district for the purpose of financing program and administrative
costs relating to the operation of career pathways programs. The
trust fund may accept revenues from any source, including one-time
property tax revenues resulting from the dissolution of the assets of
the former redevelopment agencies, proceeds from the sale of
Workforce Development Bonds, other tax revenues, grants, loans, and
contributions or employment training funds made available through the
employment training panel or workforce investment boards. The trust
fund shall be administered by each local educational agency or
community college district.
(b) Moneys in a Career Pathways Investment Trust Fund shall be
used for any of the following purposes:
(1) Qualified expenditures.
(2) Administrative costs.
(3) Grants, loans, and program costs associated with career
pathways programs.
64203. 64204. (a) The California
Career Pathways State Investment Committee is hereby
established in state government.
(b) The committee shall be composed of the following members:
(1) The Chancellor of the California Community Colleges, or his or
her designee, who will serve as the chairperson of the committee.
(2) The Chancellor of the California Community Colleges,
Superintendent or his or her designee.
(3) The Chair of the California Workforce Investment Board, or his
or her designee.
(4) One appointee of the Senate Committee on Rules, who shall
represent the business community and will serve a four-year
term.
(5) One appointee of the Speaker of the Assembly, who will serve a
four-year term.
(c) The committee is granted the sole authority to allocate to
applicants local educational agencies,
community college districts, and applicants moneys
appropriated to the Career Pathways State Revolving F und
for state financial assistance, including grants, loans, and the
repayment of Workforce Development Bonds issued by the committee. The
committee is also granted the sole authority to allocate to
applicants the Career Pathways Investment Credits authorized
in the annual Budget Act, pursuant to Section
64205 64206 .
(d) The committee shall establish criteria and guidelines for
evaluating applications for Career Pathways Investment
Credits, state financial assistance, including
requirements for commitments of financial or other resources by
applicants or a local education educational
agency, community college district , or workforce
investment board. The committee shall give priority in
allocating state financial assistance to the following:
(1) Local educational agencies and community college districts
that have an unemployment rate higher than the statewide average
unemployment rate for the most recent calendar year, as determined by
the Employment Development Department, or a high school graduation
rate lower than the statewide high school graduation rate for the
most recent calendar year, as determined by the committee using the
California Longitudinal Pupil Achievement Data System.
(2) Local educational agencies and community college districts
that include in their application a significant amount of private
funding support from their business partners.
(3) Local educational agencies and community college districts
that include in their application articulated pathways connecting
high school and postsecondary certificate and degree programs in
their region.
(4) Local educational agencies and community college districts
that are not seeking state financial assistance for existing
activities. However, priority in allocating state financial
assistance shall be given to applicants that seek to expand or
augment existing investments in career pathways programs.
(e) The committee may allocate the proceeds from the sale of
Workforce Development Bonds to applicants that have entered into
memoranda of understanding with a local educational agency or
community college district to fund career pathways programs.
(f) The committee shall develop performance criteria for
determining the financial returns to private entities investing in
Workforce Development Bonds. The performance criteria shall include,
but are not limited to, high school pupil and community college
student achievement and opportunity in the following areas:
(1) High school graduation.
(2) Completion of postsecondary programs that culminate in a
certificate or degree.
(3) Attainment of industry-recognized credentials that are valued
in high-growth, high-need, or emerging economic sectors.
(4) Provision of internships to high school pupils and community
college students.
(5) Provision of paid summer jobs for high school pupils and
community college students.
(6) Provision of externships for high school teachers and
community college faculty.
(7) Provision of scholarships or other financial assistance for
students pursuing postsecondary education or training in a relevant
career pathway.
(8) Offer of paid employment or apprenticeship to high school
pupils or community college students who are participants or
graduates of a career pathways program.
(e)
(g) The committee may prepare forms, establish
procedures, set priorities, assess, and perform other administrative
functions as necessary.
(f)
(h) The Superintendent of Public Instruction
, the Chancellor of the Community Colleges, and the
California Workforce Investment Board shall enter into a memorandum
of understanding to allocate staff resources to the committee. The
costs to these entities shall be offset by fees charged to applicants
for Career Pathways Tax Credits.
64204. Moneys in the Career Pathways Investment Trust Fund shall
be used for any of the following purposes:
(a) Qualified expenditures.
(b) Administrative costs.
(c) Grants, loans, and program costs associated with career
pathways programs.
64205. (a) There is hereby created in the State Treasury the
California Career Pathways State Revolving Fund for the purpose of
providing financial assistance to local educational agencies,
community college districts, and business entities that have entered
into agreements to implement and operate career pathways programs.
Within the fund there shall also be established a Career Pathways
Financing Account, a Career Pathways Grant Account, a Career Pathways
Loan Account, and additional accounts and subaccounts that the
committee may establish from time to time.
(b) Moneys in the Career Pathways Financing Account shall be used
to repay Workforce Development Bonds issued by the committee, or
other bonds or financing agreements entered into by the committee.
(c) Moneys in the Career Pathways Grant Account shall be used to
award grants from the committee to local educational agencies and
community college districts.
(d) Moneys in the Career Pathways Loan Account shall be used to
make loans from the committee to local educational agencies and
community college districts.
(e) Notwithstanding Section 13340 of the Government Code, all
moneys in the Career Pathways State Revolving Fund shall be
continuously appropriated without regard to fiscal year for the
support of the committee and for expenditure for the purposes stated
in this part.
(f) All expenses incurred in carrying out the purposes of this
part shall be payable solely from funds provided pursuant to this
part, and no liability or obligation shall be imposed upon the state
and none shall be incurred by the committee beyond the extent to
which money shall have been provided pursuant to this part.
64205. 64206. For calendar years
beginning on or after January 1, 2014, the committee shall allocate
the Career Pathways Investment Credit in an amount authorized in the
Budget Act for that calendar year. For purposes of this section, the
committee shall do all of the following:
(a) Allocate the career pathways investment credit for up to five
calendar years for each application the committee approves, as long
as the amount allocated does not exceed the amount authorized in the
Budget Act.
(b) (1) Give priority in allocating tax credits to the following:
(A) Applicants that have entered into a contract or memorandum of
understanding with local educational agencies, community colleges, or
workforce investment boards in communities that have an unemployment
rate higher than the statewide unemployment rate, as determined by
the United States Census, and a high school graduation rate lower
than the statewide high school graduation rate, as determined by the
committee using the California Longitudinal Pupil Achievement Data
System.
(B) Applicants that have entered into a contract or memorandum of
understanding with local educational agencies, community colleges, or
workforce investment boards with proportions of private funding
support that exceed the one-to-one match requirement described in
paragraph (1) of subdivision (e).
(C) Applicants that have entered into a contract or memorandum of
understanding with local educational agencies or community colleges
that offer articulated pathways connecting high school and
postsecondary certificate and degree programs in their region.
(D) Applicants that are not seeking tax credits for existing
activities. However, priority shall be given to applicants that seek
to expand or augment existing investments in career pathway programs.
(2) To the maximum extent practicable, subject to paragraph (1),
give priority in allocating career pathways investment credits to
applicants that seek to expand or augment existing investments in
career pathway programs.
(3) The committee shall not give priority to any applicant by
virtue of the date of submission of its application, except to
allocate credits where two or more applicants have the same rating.
(c) An applicant shall enter into an enforceable contract or
memorandum of understanding with the committee to comply with the
requirements of this part, Sections 17057.6 and 23610.6 of the
Revenue and Taxation Code, any applicable state laws, and any
additional requirements the department deems necessary or appropriate
to serve the purposes of this part. The contract or memorandum of
understanding shall also provide for legal action to obtain
specified specific performance or monetary
damages for breach of contract and shall require regular programmatic
audits.
(d) Adopt criteria that awards credits to applicants that
demonstrate that either the applicant or the local educational
agency, community college, or workforce investment board meets the
following criteria:
(1) The effectiveness of the career pathway program toward
preparing students for productive, high-wage employment in growing or
high-need sectors of the California economy. Effectiveness criteria
shall include:
(A) Pathway completion rates.
(B) High school graduation rates or community college completion
rates, as appropriate.
(C) Percentages of students attaining an industry certification.
(D) Percentages of students transitioning successfully to
postsecondary education or apprenticeship.
(E) Employment and earnings after high school.
(2) The level of the applicant's investment in, oversight of, and
ability to leverage and sustain current career pathways programs and
current career technical education programs.
(e) Develop and provide forms for the purposes of informing
potential applicants of the purposes of this part.
(f) The amount of the credit reserved for a calendar year shall
not exceed 50 percent of the qualified expenditures estimated by the
applicant for the calendar year.
(g) The committee shall report to the Franchise Tax Board, once
each year, the identity of the qualified taxpayers for whom the
career pathways credits are allocated each year.
(h) The committee may, in its discretion, consult with the
Treasurer and the California Tax Credit Allocation Committee
regarding the allocation of tax credits. If a request for
consultation is made, the Treasurer and the California Tax Credit
Allocation Committee shall aid the committee.
(i) Establish audit requirements. The committee may share
information established during an audit with the Franchise Tax Board.
(j) It is the intent of the Legislature, subsequent to the
enactment of the act adding this section, to reduce the statutory cap
on the authorization for the new jobs tax credit enacted by Chapter
17 of the Statutes of 2009, Third Extraordinary Session, from four
hundred million dollars ($400,000,000) to three hundred million
dollars ($300,000,000) and to authorize one hundred million dollars
($100,000,000) for the Career Pathways Investment Credit, effective
January 1, 2014.
64206. A Career Pathways Investment Trust Fund is hereby
established in each school or community college district for the
purpose of financing program and administrative costs relating to the
operation of career pathways programs. The trust fund may accept
revenues from any source, including one-time property tax revenues
resulting from the dissolution of the assets of the former
redevelopment agencies, proceeds from the sale of social impact
bonds, other tax revenues, grants, loans, and contributions or
employment training funds made available through the employment
training panel or workforce investment boards. The trust fund shall
be administered by each school or community college district.
SEC. 2. SEC. 3. Section 17057.6 is
added to the Revenue and Taxation Code, to read:
17057.6. (a) For each taxable year beginning on or after January
1, 2014, there shall be allowed to a qualified taxpayer as a credit
against the "net tax," as defined in Section 17039, an amount equal
to that allocated to a qualified taxpayer by the California Career
Pathways Investment Committee pursuant to Section 64204
64206 of the Education Code.
(b) For purposes of this section a "qualified taxpayer" means an
applicant, as defined in Section 64201 of the Education Code, who is
either the sole owner if an individual, partners if the taxpayer is a
partnership, or shareholders if the taxpayer is an "S" corporation,
and who was awarded an allocation of the career pathways investment
credit by the California Career Pathways Investment Committee.
(c) In the case where the credit allowed under this section
exceeds the "net tax," the excess credit may be carried over to
reduce the "net tax" in the following taxable year, and succeeding
taxable years, if necessary, until the credit has been exhausted.
(d) If a qualified taxpayer fails to comply with the requirements
of this section or with Part 38 (commencing with Section 64200) of
Division 4 of Title 2 of the Education Code, the credit shall be
disallowed and assessed and collected under Section 19051 until the
requirements are satisfied.
SEC. 3. SEC. 4. Section 23610.6 is
added to the Revenue and Taxation Code, to read:
23610.6. (a) For each taxable year beginning on or after January
1, 2014, there shall be allowed to a qualified taxpayer as a credit
against the "tax," as defined in Section 23036, an amount equal to
that allocated to a qualified taxpayer by the California Career
Pathways Investment Committee pursuant to Section 64204
64206 of the Education Code.
(b) For purposes of this section a "qualified taxpayer" means an
applicant, as defined in Section 64201 of the Education Code, that is
subject to the taxes imposed by this part.
(c) In the case where the credit allowed under this section
exceeds the "tax," the excess credit may be carried over to reduce
the "tax" in the following taxable year, and succeeding taxable
years, if necessary, until the credit has been exhausted.
(d) If a qualified taxpayer fails to comply with the requirements
of this section or with Part 38 (commencing with Section 64200) of
Division 4 of Title 2 of the Education Code, the credit shall be
disallowed and assessed and collected under Section 19051 until the
requirements are satisfied.
SEC. 4. SEC. 5. No reimbursement
shall be made pursuant to Part 7 (commencing with Section 17500) of
Division 4 of Title 2 of the Government Code for costs mandated by
the state pursuant to this act. It is recognized, however, that a
local agency or school district may pursue any remedies to obtain
reimbursement available to it under Part 7 (commencing with Section
17500) and any other provisions of law.